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The Real Estate Board of New York is changing its rules around buyer agent commissions amid broader turmoil around the topic and multiple challenges to the way agents are paid nationwide.
Starting Jan. 1, REBNY rules will prevent listing brokers from paying buyer agents and will instead require sellers to pay commissions directly, a change known as decoupling commissions.
“Listing Brokers will no longer be permitted to make the offer of compensation to the buyside broker – even if it is on the seller’s or owner’s behalf,” REBNY said in a post explaining the change.
The changes are made via the 2024 Universal Co-Brokerage Agreement, which governs REBNY and New York City’s Residential Listing Service. The Real Deal first reported the changes Thursday.
Under the changes, sellers will negotiate a commission directly with a buyer’s broker. If they agree on compensation, the seller or property owner will pay the buyer’s broker at closing, REBNY said.
“In cases where the seller does not offer compensation to the buyer’s broker, the broker’s buyer may negotiate their potential compensation from the buyer,” the organization said.
The RLS and REBNY are independent from the National Association of Realtors, which is currently attempting to make the case in court that its rules around commission sharing don’t violate antitrust laws. It faces challenges in two major class action lawsuits, as well as inquiries by the U.S. Department of Justice.
Still, REBNY’s 2024 Universal Co-Brokerage Agreement includes a clear statement that commissions aren’t universal, and that listing brokers can’t suggest a commission for buyer’s agents.
It also includes a new section around sellers paying commissions. The rule also applies to rental properties.
“For the avoidance of doubt, offers of compensation, if any, to the Co-Broker involving sale and/or resale transactions must originate from the Owner,” it says, adding “the RLS provides the platform to facilitate such offers of direct compensation from an Owner.”
That’s in addition to an updated statement about avoiding commission fixing.
“Neither REBNY nor the RLS shall fix, control, recommend, suggest or maintain commission rates and/or fees for services to be rendered by Participants in the RLS,” the rules say. “Furthermore, neither REBNY nor the RLS shall fix, control, recommend, suggest or maintain the division of commissions and/or fees between cooperating Participants or any other parties.”
REBNY didn’t respond to requests for comment about the changes, which were part of a handful of other updates being made to the agreement.
Nest Seekers’ Bianca D’Alessio told The Real Deal that she was afraid the change around compensation will give buyers’ agents the upper hand, particularly during buyers’ markets.
“As the market shifts and gets more difficult, a buyer’s agent that feels they’re more in control can leverage that,” D’Alessio said.
Others told the outlet they appreciated the transparency, and that some buyers are already negotiating commission sharing details before signing listing agreements.
“These amendments promote transparency and consumer confidence in the residential real estate transaction,” Ninve James, a REBNY senior vice president, said in a statement. “They also provide for a more efficient RLS to help New York City brokers and agents do more business.”
REBNY added that it believes decoupling broker compensation is “the future of how residential real estate is transaction, and expect other listing services to follow this lead.”
